tv Bloomberg Markets Bloomberg December 22, 2015 12:00pm-2:01pm EST
betty: good afternoon. i'm alix steel. here's what we are watching at this hour. the u.s. economy continues to grow, buoyed by healthy consumer spending. but investors don't like everything about the latest gdp numbers. oil prices trying to recover from a volatile start to the week. we will talk to one analyst who sees some bright spots. the biggestlim is loser among the world's richest people. have you shed about $20 billion in wealth this year. -- how he shed about $20 billion in wealth this year. let's go to ramy inocencio. ramy: we are adding on to gains that we saw from yesterday. markets shrugging off the fall we saw.
existing us home sales falling. we are all in the green. .4%.&p 500 up oil is also moving higher for the second day in a row. let's go into my bloomberg terminal. energy is the biggest gainer up by 1.75%. and part of the trend has to do with energy. but are not 100% correlated they do move in tandem lately. ramy: they have been moving quite closely. the fall in oil has had a knock on effect. nymex crude is pretty much at session highs.
it looks like traders are looking ahead to tomorrow when the eia releases its latest inventory report. inventoriesting likely rose one million barrels last week. morgan stanley said, not so fast, a rebalancing might not happen until 2017. as oil rises, oil stocks are getting a boost. by 1.3% breaking a three-day fall. and apple is falling today. .13%.now down bylowered its price target five dollars because of production cuts in apple's supply chain. for itsstock is headed worst annual fall since the financial crisis. and caterpillar is up the most since october by 4.6%.
otr raising its rating to mixed from negative. alix: that's interesting. a good window into the health of the global economy on the industrial side. thank you so much. in on the bloomberg first word news this morning. mark crumpton has more. at least nine students have been killed by a mortar shell that slammed into their school in northeast syria. and islamic state group leader behind the attack. toks aimed at finding an end serious civil war will restart next month. that's the word from the united nations. the diplomats will gather in geneva as they did for the previous round of negotiations. the peace proposal was crafted by russia. it doesn't mention what should be done about bashar al-assad. western powers want him out what russia is backing him. u.s. army sergeant bowe bergdahl
made his first appearance before a military judge to face charges of desertion and misbehavior before the enemy. he was arraigned tuesday during a short hearing. entering a clean and did not decide whether he wants to face a court-martial with a jury or one with just a judge. if convicted at a general court-martial he could get life in prison on the misbehavior charge and up to five years for desertion. president obama plans to host a u.n. summit next year on the global refugee crisis. u.s. ambassador to the u.n. samantha power says the issue will be a major focus during the president's final year in office. he wants to push other countries and the private sector to increase humanitarian aid. the u.n. estimates the world's displays population now exceeds 60 million. hillary clinton is sharing her plan to cure alzheimer's disease in iowa. she is pledging to spend $2 billion a year to find a cure in
alix: welcome back to bloomberg markets. i'm alix steel. some of the top forecasters on the street are issuing a running for investors in the new year. beware the consensus. says investors would have been better served in 2015 if they listened to warnings that low interest rates will hurt investors. he spoke to stephanie ruhle. >> if you look at the markets
from an asset allocation standpoint -- i mean bonds, cash, stocks, commodities -- the best returning asset this year is cash at 1/10 of 1%. we've got data going back 80 years. that's the worst year ever. there's nowhere to make money this year. five years ago david tepper said, the fed is going to do qe and everything is going to go up. and it did. and now the fed has stopped you and is raising rates and nothing is going up. an asset allocation standpoint we have the worst year in the last 80. >> what does 2016 look ahead? thaterybody thinks something magic happens in january and we have some kind of reversal on these trends and i don't the a reversal. -- i don't see a reversal. stocks can correct, but everything is correcting right now and it the reduction of
stimulus. it's the perception that we produce stimulus even more in 2016. it's going to be more of zero is the return for everything going into the first half of 2016 until something changes. the fed gives up on raising rates or the economy turns. senioret's turn to portfolio manager with sky bridge capital. it was a pretty grim view. do you agree with that? >> you have to be very selective next year. we think about this year as a mini 2011. fears of a china hard landing, the collapse of energy and commodities. you have to pick your spots carefully. we think areas of structured
credit, some areas of the mortgage market look favorable relative to other things. washe commentator before right. it's not like somebody's going to ring a bell and next year is going to be a great year for all these assets, but there are far more opportunities today than this year. mortgage-backed securities and collateralized loan obligations, but the spreads have been widening there as well. >> that's the good thing. if they hadn't widened there wouldn't be an opportunity. the key is why by fundamentally impaired distressed assets? in any other scenario you are going to lose money. when you can buy fundamentally sound stressed assets. not as cheap as they were at the end of 2011, but more attractive. alix: that chart was illustrating the stress has been in energy. but it has been bleeding over
into other sectors as well. no one is spared. >> that's the key again. alix: you like that. >> of course. let's start with commercial real estate. defaults and a link with these have been trending down. markets look forward. obviously defaults are going to go up. the what would cause that? a true u.s. recession. and the probability of next year and a year after that is fairly low right now. if you look at collateralized loan obligations, why are they sold off? fears of contagion from high-yield. alix: they have more commodity exposure. >> step back. is five tovalue, clo 7%. people are running away from
credit in general. quantitative tightening is taking place. there have been fears of a fed hiking rates. we see much better quality -- credit quality. overall it's much safer than high-yield and you have much more of sides and far less downside. alix: what kind of return are you expecting? >> if you want to be greedy you can go after the more commodity sensitive yields and you have around 14%. we advised to avoid those because we don't see commodities coming back anytime soon. stuff that is more bulletproof is very attractive compared to risk free. youou do get armageddon, will lose money. if you get a very bad recession with energy extremely low, you could lose money. it's not risk free. there is no risk-free that could make you that type of return. but we think the risk is very low.
think about the residential housing market. you have the widest spread since the second quarter of 2012. last we checked, the u.s. housing market has done pretty well. delinquencies and defaults are down. the consumer is in very good shape. you have had this huge collapse in energy prices. andit has been the loser the consumer has been the winner. we think that sector is pretty attractive. priceso you need housing and the housing market to really improve substantially to make those bets pay off? at a long as you are nominal gdp plus or minus trend line, you are going to do fine. withstand 5% to 7% depreciation housing, which looks unlikely. to be greedy and go
after more, you need a continued rapid appreciation of housing. given where the market is today, we don't think that makes a lot of sense. the extreme rise in the dollar and the volatility we leadseen in stocks and over from china as well have been difficult. what is the risk going into 2016? >> every year we look and say, what could cause real damage? we are always fearful of the next bear market. typically that's the risk that gets you. right now the present risk is of a china hard landing. that's the only thing we can figure out and we are fairly simple people. that's the only thing we can figure out that could potentially cause a bear market. because their markets don't bearen often -- their
alix: time for the bloomberg business flash. boeing will pay $12 million for failing to meet a deadline to show airlines a way to reduce the risk of fuel tank explosions. boeing will also have to take a series of actions to improve the safety certification of its claims and aircraft production quality controls.
the fuel tank instructions are part of an effort to address problems that caused a boeing 747 fuel tank to explode over the atlantic ocean in 1996. says theie & fitch head of its namesake brand has been fired. the move eliminates a potential contender to fill the year-long vacancy at the ceo position. fran horowitz will assume the newly created position of chief merchandising officer effective immediately. deal reported between ford and google could mean the companies will be first to put a self driving car on the road. yahoo! auto cited sources that say ford's ceo will announce the partnership next month. google has said it plans to get an autonomous car on the market within five years. and that is your business flash update. let's head over to our markets desk with ramy inocencio.
ramy: e. coli and food still in the news. those are two things we don't want to go together. chipotle shares having another rough day. down by nearly 4.5%. this is now at its lowest in the past 17 months after another revealedof e. coli was at company restaurants in kansas as well as oklahoma. schiphol lay down and falling more than 4% yesterday. the stock is really hurting. since the outbreak happened on november 2, you can see chipotle shares have lost this month about 22% of their value. that has sent their stock into a bear market. shares have lost about $4.3 billion.
by e. coli. it is also cosco being affected by e. coli. shares being affected earlier. we saw when the news came outoud the movement is reflecting that. and finally, i want to switch over to the energy sector. sun edison shares are sinking. they are sinking the most in the past month. 25%, losing about a quarter of their market value. this has to do with hedge fund appaloosa and terraform power. a 10% stakes about in terraform and is now questioning terraform itself on recent acquisitions that it had. appaloosa says that terraform is actually acting more for the benefit of suned.
alix: thank you so much. the theme in 2015 for the oil market was in opec that keeps pumping crude. what about 2016? our next guest says a non-opec supply will move prices. so where the cuts going to come from? let's ask the chief oil analyst at energy aspect. s us now.d jus when you take a look at 2016, how much supplied you expect to come off-line and where? we do expect non-opec supply to come off by around 200,000 barrels today. , crudear led by the u.s. production should fall by over 300,000 barrels a day.
but the rest of the world also becomes very important. we have lost about $200 billion of capital expenditure between 2014 and the end of 2015. they will start to show up in places like kazakhstan. already seeing double-digit declines there. brazil already grinding to a halt. their production growth has pretty much ceased. we always talk of china as a big consumer. produces 4.2 million barrels a day. the same as canada. starting to see production decline. collectively you could easily see 200,000 if not more. alix: when we have a surplus of 1.5 million, that seems pretty paltry. do you expect opec to cut or more supply to come online as iran starts to export and libya also? >> that's a very good question. why we precisely
actually don't expect the rebalancing fully to kick in between -- before q4 16. opec production can really surprised the market because people are totally focusing on iranian production coming back. updo think that comes back to 400,000 girls a day, we also think there is huge downside risk in countries like nigeria, angola, venezuela, iraq, libya. all of these countries are extremely cash-strapped. you can see production fall despite they have been maximizing prices. the client rates are stepping up. you see cancellations of projects. that's why there is a big risk that despite iran coming back, we see opec production hold flat or fall. and i don't think the market is focusing on this. in q1 next year, a lot of maintenance work in uae, saudi arabia, qatar.
opec production could easily fall. alix: interesting. that short-term issue with the maintenance. part of what we have seen over the last few weeks has been an adjustment of the curve if you look at wti versus brent. now we see stronger wti prices for the next eight months. feel that weakness is justified? >> we all know why it happened. it's a huge decision, the lifting of the u.s. band. the market got excited and started pricing wti very strongly. crude production in the u.s. is falling and there's also better demand because there are new refinery capacity coming online in the u.s.. problem now is wti is so much stronger across the curve relative to brent, it's actually having the ultimate impact --
opposite impact and pulling in imports rather than incentivizing exports. the curve has actually gone the other way. which happens in a market because there's enthusiasm when news breaks like this and the curve is starting to price that in. but this will have the opposite impact of allowing it. you are not going to see any for the next several months at these prices. have all ofl just your excess oil abroad. something i have been hearing about is increased chatter about the possibility of oil going to $20. goldman has been making a case pointing to the possibility of oil falling to the cash cost. do you see any chance of that happening? >> think after a certain point in any market, the price becomes a number.
i can tell you a lot of regions were cash costs are in the 30's or 40's. arguably even today we are trading below cash costs for a lot of reasons. her instance the north sea. -- for instance, the north sea. isever i think the key because it has been so warm and that's why we believe there has been renewed pressure on oil prices and if we continue to remain this warm across the pressure will the continue. we could go into the high 20's or early 30's. chief oilta sen, analyst at energy aspects in london. we will be right back. ♪
when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. alix: live from bloomberg world headquarters in midtown manhattan you ever watching bloom television i'm alix steel.
mark crumpton has more from our bureau. mark: the white house is calling the killing of u.s. soldiers cowardly. they were on patrol and targeted by the suicide bomber on a motorcycle the taliban claimed responsibility. one was a new york city police detective serving in the air national guard. two others were injured. the attack raises the number of u.s. service personnel in afghanistan this year to 21. the man accused of buying rifles used by the san bernardino killers is being held without bail. a judge ruled enrique marques poses a threat to the community. he is facing weens and terrorism charges. because the guns were bought illegally.
and a woman found in her jail cell three days after her controversial arrest, the trooper who arrested her during a routine traffic stop can still face charges. a new poll shows senator george cruz gaining on donald trump. the quinnipiac sur vay shows donald trump with 28% nationwide and ted cruz at 24%. the iowa caucuses are 42 days away. global news power bid our 2400 journalists in our more than 150 news bureaus around the world. i'm mark crumpton. alix: a record amount of deals with struck. m&a retail companies sold $475.5 billion the highest number in at least 12 years, for more i want to bring in
jeff mccrack at any managing editor of "the deal." why? joyful well 2% is as much as anyone is able to find or ask for in this era and even in ompanies, whether they are m&a things, mcdonald's they are struggling to find more consumers and more growth and they start looking around for other companies in a similar space and figure we've gotten really food at cost-cutting and growth and there's a lot of that going on the other thing is -- i think one thing i should mention is what happened a couple years ago when heinz got taken private. they got bought by investors in brazil who are really, really good at cutting costs and they have put pressure on everyone else to start cutting costs or
to buy from other people and cut costs. and there are some people that were that are there that were on the -- alix: so really coming at it from more of a defensive capacity rather than an offensive capacity, what's the next tieup going to be? you mentioned food and bevpble. we are looking at emerging markets? europe? joyful one is asian companies. i think you're going to see re japan firms rather than chinese firms buying in so we have seen the beverage base do big deals and consumer space we are going to see more in the consumers space and food space and i mentioned japan and back back but there are companies
that have a lot of money and companies throughout they could buy and i wouldn't be surprised -- ee that happen in 2015 in 2016. alix: we will discuss an investor who is putting his money in guns, bullets, jails and more. are products that turn other people away actually good places to put your money? ♪
some form of a santa claus rally. remember it's the last five days of the trading year and the first two of the following one. i do think it will finish higher. leading into networks year i think 2016 is going to look a lot like 2015. >> uh-oh. coif but in terms of growth potential places like northern europe and other developed markets such as japan. so we will start to see international markets outpacing domestic markets in temperatures of potential. >> i think in the last five years you could see japan's market on a tear. and a lot of assets have been going into european markets as well and those markets have outperformed us. i believe the p.e. is actually higher internationally than in
the united states. coif the major difference is once you bring that back into dollar terms if you look at the ftse and other international markets the strong dollars are hurting many of those investments and where many like myself are looking to allocate money overseas looking to take advantage of their economic recovery very similarly where we were back in this country in 2009. >> but underlying fundamental growth, is that flew japan? my sense was it was a lot more government intervention. coif yes, but when you look at draggy, that's largely government intervention. when we were becoming lower in terms of the overall interest rate scale and what did that lead to? arguably one of the largest bull market runs in our
history. > so simply because draghi didn't take bazooka out? coif yes. i think the streak was wrong. >> ugh! matt, did you hear that? always making a chart. coif i'm going to try to steer clear of that but i think they are trying to navigate course for their own economic recovery, and that may take longer than the u.s. and theirs may not be at the same slope as we saw here in the u.s. >> and how much overall influence will china have in all this? the united states? europe? coif i think china is definitely a large economic player and we are trying to shy away from that. we heard about what they want to do to stimulate growth. we are going to wait and see and i think there's other opportunities away from china
and other emerging markets. >> the emerging markets are particularly cheap right now. that could be an opportunity if china does benefit from their stimulus. >> yes. absolutely true. >> but they don't have the same flexibility in terms of their dote g.d.p. ratio is the largest in the world. he can't put more debt on the balance sheet. alix: that was kevin asset management president and that was earlier on bloomberg, go. the recent mas killing in san bernardino has renewed calls of gun investors to get rid their gun stocks. look at how shares of smith and wesson and rooger have performed against the s&p 500, it's not even close. leaving them in the dust. let's bring in matt ableson who
has been looking at this trend. u have pension funds repenting from them and dumping their stock. >> three years ago i think it's the second biggest fund next to the california teachers and they said we are going die vest from certain gun holdings and sold about $3 million shares of rooger and smith and wesson and added the london company of virginia so it's a list of where their money might go so we wrote about who they are and they have a lot of really interesting holdings. guns are just kind of the beginning of it. alix: what do they own and what has their track record stpwhn max: so they have $11 billion and are literally the biggest shareholder of the biggest gun maker in the u.s. and have a
lot of back and amo stocks. then also we found holdings that are for example private prisons and funeral companies as well, so they certainly don't blanch at companies that might upset other people, some viewers maybe. alix: we just saw a picture of the c.e.o. of that firm, stephen god die-hard. what's the return been like? have they succeeded? max: over time they have been pretty good though they have not been good for the year. they have seven funds and all seven are down through the first three quarters of the year but over time they have all made money and gotten really big. i think they have quintupled over the last four years so went there having $1 billion or $2 billion to over 11 billion.
which means they are attracting serious investors. ix: and you can see on a coal's balance sheet how much they produce so you can understand how big of an environmental impact it may or may not be but how do they max: when adam used the bush rival they said pretty soon after, we are very upset about this and we are going to try to sell our gun holdings, but they couldn't. the freedom group still owns bush masters. now, i think they have sort of changed the financial structure of it and my understanding is they sort of spun it off into a different entity and changed their name but when a gun is used in a massacre we tend to know who the company is and we
were able to track the pistol to the rooger company three miles from where they were used and if these guns were used in violent and upsetting ways, it's a good stock, though. alix: thank you. bloomberg's max ableson joining us. coming up, it's the time of year when forecasters warn of what could go wrong in the new year. what could actually go right? ♪
alix: you're watching bloomberg, i'm alix steel, this is your global business report. here's what we are watching germany's largest deutsche bank flagged as much as $10 billion n suspicion suspicious trades. and what is ahead for the zphean and carlos lynn falls a few notches on the bloomberg's billionaire's list. he'll explain how he lost almost $the 20 billion this year. first the deutsche bank the firm is flagging up to $10 billion in suspicious russian transactions. the sources may not have been checked for money laundering as the money was moved out of russia. the spanish economy
drew in the third quarter. central bank raises forecasts for next year but according to the chief global strategist, an inconclusive result will bring an extended period of political uncertainty. >> we are looking at negotiations and the possibility that a condition of forming a government would be a referendum, a binding referendum on clients. it will be much more to come by and you can't rule out a second election. alix: and the news is getting increasingly dire for to shiba. the japanese company has lost about $2 billion in market value over the last two days after toe shiba recorded a current record loss for the fiscal year. and finally carlos lynned that worst year among the world's wealthiest people. he has lost nearly $20 million
since the start of 2015. the share of the telecommunications giant is headed to the -- he is now fifth richest person down from third earlier this year. >> time time now for the bloomberg quick take. today's topic, choking pollution in china. we've seen thick blankets of smog covering schools, cities and beijing is under a smog alert for the second time month. the highest alert possible. how can they clean up the air? there's a situation. smog is reaching hazardous levels in china and concern about air pollution exploded in 2013 as the tiny paurtkls that pose the greatest health risk peaked at 35 times the recommended healthy limit. chinese authorities responded
by shutting down some coal-burning power plants and put in regulations. now, china is in focus after it eclipsed the u.s. as the biggest source of green house gases. so it will take years to reverse the country's dependence on fossil fuels. chinese officials are mindful of how they lost the public's trust with the sars virus and the tainted milk. china was taxed to limit green house gases and it's stepping up spending on clean energy. already china has 64% more solar energy capacity than the u.s. this year he pledged to unleash an iron hand but along with
local officials, invested interest such as boosting economic growth. that's today's quick take. back to you alix. ix: for more stories visit bloomberg.com/quicktake. let's go to abigail life from the nasdaq as she is looking at some of the stocks making headlines. abigail:having their best day in nearly two months but the catalyst for the higher move is the company announcing it's resuming its buyback immediately to shareholders in the forms of purchases and dividends. some will be a short squeeze like valuations attractive and something that should attract investors in teem. and the worst year on record on it's -- at
$60 it suggests the stock may move up higher by 40%. alix? alix: thank you so much abigail doolittle. ter all the gloom, doom -- gloom and doom, our next guest joins us to tell us what could go right in 2016. you talk about the fed doing the right thing and depreast returning to the publicing market. let's talk about the fed. what could go right? mark: well a lot of people said it's not the time to raise interest rates. one gave four more reasons why it's a mistake put i was challenged by the c.e.o. from one of the biggest banks in the u.k. day we found a very happy --
if you look at the u.s. economy overall, it is showing signs of help. now the fed wants to be able to grom zero arguably so it has capacity in case. but it might turn up if there's enough evidence of a recovery but buying in the u.s. is the right thing for the company. loirks mark i should point out the chart i was showing took a look at the average growth over the past five years was 27.5% and your charts are all above that. so even if we are not going gangbusters, it's still pretty impressive for an average. mark: if all you knew was that outlook you wouldn't expect interest rates to be close zero. alix: and in turning to greece, you say that perhaps greece will return to the capital market yet the last time they
were there was april of 2014. if you lent money to greece then you are not a happy camper because you lost money. what makes you think this can turn around? >> i met a whole lot of investors and government officials. even in the past months they have got an few of them under their belt. they have a very small majority in government. one passed a bill for budget and a bill to deal with bad debt and a couple privatizations in the past week. greece is actually on track to meet all the conditions of its bailout and when you talk to government officials they are incredibly confident that they will start to see growth in the third quarter of next year and i saw car crash of greece and it looked like it was on the cards for myself and that was the only way greece was going to get out of here.
they have seen committed to meeting all the requirements placed upon them and with a following wind if they continue to meet these commitments, they could have growth next year and that could give them a way in the third or fourth quarter to come back to the bond market, stand on their own two feet and prove that greece is at least on the up wards swing once again. alix: if we can take a look at that chart showing the bond that was issued? 2004. over the longer term, how this could be a very scary picture for some investors parting with some cash. >> there's no question that you have to hold your nose and close your eyes if you invest in greece but if you compare them to where they were last summer, losing 40% of face value. u got think the future is much
more optimistic than even 2014 so there are a lot of investors that are investing on greece peripheral markets. alix: mark. thank you. i love that. so greece can do it right and get to the capital market. a got way so end the year. thank you mark gilbert joining us in london. coming up on bloomberg's markets. choppy waters for transport we will tell you what's in store for global trade. ♪
from bloomberg world headquarters in new york, good afternoon. i am alix steel. the u.s. economy grew at a fairly healthy clip in the third quarter, but investors not impressed as stocks struggled for gains. spacex's successfully launches rocket into orbit. lower oil prices have been a boom for the shipping industry but there may be choppy waters ahead. it will -- we are going to tell you why. let's go to the markets desk, where a minas and seo has the latest. stocks were struggling despite the good economic data. now we are off to the races. ramy: looks like we are at session highs. some of the reasons include oil. oil is trading higher for the second day in a row. markets are shrugging off the
fall, also atomic like i am, in existing u.s. home sales -- also at 10:00 a.m., in existing u.s. home sales. -- is up by the most, 20% .8% there. this is the seasonality heat map. basically come all this red and green, not for christmas, obviously, but the pops and the drops since 2001. i want to direct your attention to december. we are still on pace for a loss. the last time that actually backned was fact it -- was in 2002, a long time ago. that is when we saw the drop of 6% for december. basically, what we are seeing is this rally at least for now. alix: something truly amazing in the energy markets. the bgi crude is two cents higher than brent.
it has tried to do that the last few years and hasn't been able to make it -- oh, three cents, three cents above brent. ramy: finally is happening now. alix, you are totally all over this. we can talk about this over a whole hour, i'm sure. the price of nymex crude right now of by 1.3%. look at that. brent crude is down a little more than .1%. looks like traders are looking ahead to the inventory report. inventories likely rose by one million barrels last week, according to our own bloomberg survey. at 2004 lows. i want to talk about currencies and treasuries. looking at the euro, it is rising, as the greenback is losing strength. it is up by about half a percent here, the highest against the dollar since december 2014.
these are rising. it dropped 10 basis points over the past three days. this is the highest in five days. they are on track to put -- outperform stocks globally in part because of china growth driving investors to save havens. mark compton has more from our news desk. war. syria's civil the talks to end the conflict will restart next month, according to a u.n. official. diplomats will meet in a geneva. the peace proposal, crafted by russia, does not mention what should be done about syrian president bashar al-assad. western powers want him out, but russia backs him. authorities have released a man wanted in connection for a bomb hoax aboard a paris-bound air
france flight. the police officer said he found the package and give it to the crew. the plane was forced to make an emergency landing in kenya. it is the fourth hoax directed at the carrier since the november terror attacks. the mall of america is asking a judge to ban the scheduled wednesday protest by black lives matter. group has led protesters across minneapolis demanding the release of the video showing last month's police shooting of an unarmed black man. the day before christmas eve is one of the busiest shopping days of the year. a murder charge will be five against the woman accused of ramming her car into a group of pedestrians. police say the 24-year-old intentionally drove her car into a crowd sunday along the las vegas strip. one person was killed, more than 30 others injured. her three-year-old daughter was in the backseat at the time of the incident. she was not injured and is reportedly in the custody of child welfare authorities. in remarkable triumph in rocket
system maker that announced a takeover weight yesterday that will expand its business. it sent shares to a six-year low. company makes systems using the same kinds of memory chips as smartphones and tablet computers, deal paid at $870 million in cash. this would add it to a debt burden that climbs to $1.5 billion as of october 31 from zero three years earlier. at the bond market at a time when corporate it yields are rising. they expect the deal to drag down earnings. the deal would be cut by $.25 to $.30 a share. and analyst says that buying solid fire will reward all issues even if the sales of full
for this have fallen for eight straight quarters. put it all together come the shares are down 4.3%, ending for the lowest close since october 2009. carol: rbc capital markets also down grading the stock on this tuesday. thank you so much, david wilson with the latest on netapp. time to talk about technology and we want to talk about elon musk, tesla, spacex specifically. let's go to the san francisco bureau where we find emily chang. i love the back-and-forth going on between elon musk, jeff bezos, and the race for space, if you will. tell us about spacex and their reusable rocket. this has been a key goal of elon musk. emily: carol, this could be a turning point in rocket history. elon musk's dream of landing a reusable rocket coming true today. back in june he tried to do the same thing.
the rocket exploded. simply devastating. now six months later, they have managed to do it. we have got some great video of the rocket launching into space. later, the market starts coming back to earth, coming in for a soft landing. what this means is that space travel can and very well may be cheaper going forward. that means more missions, more mars,ation, a mission to a realistic possibility. spacex can do this more cheaply than any of its rivals and that .ncludes jeff bezos spacex temple of a mission like this for $60 million. of course, jeff bezos did beat him to it. landed a reasonable rocket earlier this year, but it was smaller and didn't go as fast or as far. jeff bezos telling elon musk,
"welcome to the club." it was a bit of "hey, i readied to that." -- already did that." the daughter of an iran optical engineer, my dad did a lot of stuff in the space program. the idea of three booster rockets is crucial because it is so essential exploring space to fascinating to see this at this point. we -- do we know what is next for elon musk and spacex? emily: they launched 11 satellites into space. the satellites are now orbiting space. they are going to be working on making this cheaper, making this easier, making this more reliable. one soft landing means they can do it once. again?y do it again and to go to mars, he wants to die on mars, he wants to colonize mars. the beginning of a
that's running. -- a potential journey. carol: you went to new zealand could tell us about that. emily: the holder of the biggest copyright infringement case in history, big critics coming down in new zealand at 5:15 p.m. pacific time today that will determine whether or not there is enough evidence to support accident and came to the united states and standing trial here. kim.com is the founder of megaupload, at one point the biggest filesharing service in the world. there was a lot of pirated movies and music on this service. he is accused of ripping hollywood off, basically, of $500 million. id on hisan infamous ra mansion in new zealand, where he had apparently fled for cover. i asked him about that time and
what that was like. , heavily armed with assault rifles, storming the property. some of them arriving in helicopters. withof them arriving attack dogs. a completely bizarre scene, where my staff had to lie with , gunsace on the ground pointed at them, my little kids crying because they were scared. my wife separated from the children. theyhen they got to me, beat me up and the rest is history. emily: what did they take? >> thousands of servers off-line that hosted the data of millions of users that have used our web services. emily: most of your assets are still frozen. >> they are now saying everything they have seized here now belongs to the u.s. government. emily: and his assets remain frozen. we spoke to him when he was
still living in that mansion. yes since been forced to leave that mansion and has moved into an apartment in auckland. i've seen some pictures of it on twitter. it is not too shabby. not a huge step down, but he is waiting for this big decision today coming from the new zealand court judge. i've been speaking with kim, i've been speaking with his lawyers. they are anxious for this decision. he can appealant, the decision today if it turns out not to be in his favor. we are going to be following this closely all day long and of course on "bloomberg west." carol: fascinating story, looking forward to it. emily chang joining us from our san francisco bureau. let's get an update on the markets. a shortened holiday week we have seen mellow trading, if you will. certainly a more positive trend or tone to the markets right now. the s&p 500, up about 11 points. dow jones industrial average, a bit of a rally come up about .7%, 124 points.
alix: you are watching bloomberg television. i am alix steel. time for a look at some of the biggest business stories in the news right now. the u.s. economy expanded at a 2% rate in the third quarter, gaining christensen product followed by an advance in the second quarter. the number was supported by consumer spending as this is
struggled to sell to overseas customers. home sales plunged sharply in november. the national home association of realtors says the existing home collapsed 10.5% to a seasonally adjusted annual rate of 4.70 6 million. in 19 monthsakest but overall, sales of existing homes are on track to rise roughly 5% for the entire year. is posting second quarter sales that trailed analyst estimates. the results were hurt by defining revenue from the household brands. earnings per share came in at $.71. 20 shares were up 13% since the beginning of the year and 11% in the last 12 months. that is your bloomberg business flash. let's head over to the markets desk fore-check on some of the company movers, looking at analyst calls from this morning. ramy: i am going to be looking at construction stocks and airlines stocks and retail
stocks. let's go to the construction space. caterpillar is of the most since october and at session highs right now. taking a look at this, up by more than 5%, and it continues to climb. up and up and up this whole entire day. caterpillar has been raised by otr to mixed from negative and it says that sales declined in the heavy equipment and power quitman now easing, but otr says "fragile." spirit air and alaska air are heading in the opposite directions. a 60 lawler -- a $60 price target on spirit airlines, raising it to a buy. by 2%. thana airlines, down more 2.4% on concerns the 2013 -- 2015 earnings are not going to do as well as they did this past year. under armour is fallen to its lowest intraday price since
june. we saw the early of around 11:00 market it as there's some of those lost -- it has paired some of those losses but susquehanna cut the price target to $86. margins may the under pressure because of sales as well as bad weather and interestingly because of traffic. i want to headed to another retail space, the finish line shares on the move. by 7.7%.ne is up foot locker up by 4%. bank of america and merrill lynch lifted her rating on the stock by two notches. 2017 will be a growth year for the retailer on better margins. alix: now, from the u.s. to europe, we are at an interesting time for investors. what do we mean by that?
we want to check on global markets this year and what is ahead for 2016. overall, european stocks are very popular trade for 2016 among many analysts, yet the s&p has outperformed european stocks so far this year. let's head over to carol massar for more on european stocks. carol: all right, thank you so much come and will come to everybody on bloomberg tv. we do want to talk about the value space and what it means for investors coming up in 2016. david marcus knows a lot about that, chief executive officer at evermore global advisors. his evermore global high you find has beaten all of its peers over the past three years. good to have you back on bloomberg radio. what is this environment been like for you guys in terms of finding some good value plays? david m.: a great environment for finding because the value we look for, not just cheap stocks, the cheap stocks where there are catalysts. breakups, spinoffs, restructuring, all caps of strategic change.
this is an environment where there is so much going on in the world and a growth and companies are starting to restructure themselves to take advantage of thinning out their bloated structures so they can survive in a low growth environment. carol: they affect the figure out new ways for revenues in an environment where they are getting squeezed in every given space. let's talk about some of the companies you find interesting. have you added to your find at this point? .avid m.: sure our largest holding today's vivendi, a big french media and telecom -- carol: that huge -- they are huge. david m.: and they own universal music, the largest music company in the world. everyone who goes from listening to music for free to paying for it, it is wonderful for universal music. even in a no growth environment there are businesses that can do all to vivendi has gone from ton of net get to know a billion dollars of net cash as it
restructures, sells non-core assets. carol: media companies are known for having a bunch of debt but this is interesting. david m.: he has a war chest and they have acquired a stake in ubisoft, which makes xbox games. very aggressive now. carol: you also like telecom italia. this is one of your top 10 holdings. you have held it for a while. david m.: that's right. the largest phone company in italy, but tomorrow story for 15 years. we think it is finally i did a story. -- finally a today story. is pushing this company to restructure and sell non-core assets, meaning to get out of brazil eventually, and refocusing the business. company's where there is operational restructuring and where they're coming up as this is an they restructure finances, that is a powerful combination. in this low growth environment you are seeing lots of m&a activity.
lots of deals, companies are buying each other. carol: just look at the equity returns there. , thisr name that you like is a spinoff. david m.: it is the insurance are of ing bank. a few years ago during the financial crisis, ing was in trouble, and part of the bailout by the dutch government was they had to get rid of their non-core assets. this insurance business is one of their biggest assets. it came to the market just about 15 months ago at about 20 per share. oury it is about 32, one of top three holdings, and it is trading at 50% of book value, because investors don't understand spinoffs out of the gate. carol: it takes a while to understand how it should normally trade. david m.: exactly. we want to get in there right out of the gate. on the thai people figure it out, it is much more expensive. carol: what about the big pharmaceutical mergers we're looking at -- exceeds me, the
chemical merger between dow and dupont where they plan to merge instead off into three different companies? is that something of interest? david m.: yes, exactly what we look for. we don't own day-to-day. this is a deal that will take quite some time. but we are working on it aggressively. you are to have three companies come out of it. 1 ande merging 2 into breaking them up into three. a lot of moving parts. that generally means the market won't get it right out of the gate and there will be ways to play it. another name, c.k. hutchinson, that you like. talk to us about that. david m.: the big conglomerate told by the richest man in hong kong. he is 86 years old and is slowly handing his empire to his son. at think the -- in the meantime from he merged his two largest holding companies, creating this covenant good a lot of investors don't understand that half of the business is actually in europe. it is being lumped in with china flights that are not -- china
plays that are not doing so well but have of it is in europe. you're getting something at a cheap china price -- whoever thought we would talk about cheap china? this is a wonderful way to get in as they continue to grow their acid-base. extreme the -- asset race. -- asset base. extreme the cheap. carol: david marcus joined us on bloomberg radio and bloomberg television. you can check out more on bloomberg.com. ♪ bring your family and friends together
news. the "first word" mark crumpton has more from our news desk. at least nine students have been killed and several wounded by a mortar shell that slammed into an elementary school in northeastern syria. syrian tv reports an islamic state group is responsible for the attack. mali has announced a state of emergency that will last for 10 days. it prohibits large groups from gathering in public spaces and permits police to search people's homes. the government previously declared a state of emergency after the attack on the radisson hotel that killed at least 20 people earlier this year. democratic residential front-runner hillary clinton is sharing her plan to fight alzheimer's disease today in iowa. she is pledging to spend $2 million a year to find a fewer in a decade. more than 5 million americans have alzheimer's. that number is expected to grow to 15 million by 2050. 50% of the united states would
be embarrassed to call donald trump their president. that is according to a new quinnipiac poll released today. 23% say they would be proud to have trumped as their president. say theydependents would be embarrassed, but 44% of for public and say they would be proud -- 44% of republicans say it would be proud. marsis calling off its mission because of a leak. the spacecraft was supposed to take off in march and land on the red planet next year. it is designed to examine the geology of mars in depth. launch opportunities for mars occur only once every two years. it wasn't immediately clear whether nasa had canceled the mission entirely or would delay it until 2018. news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. alix, back over to you. alix: there are going to be some
choppy waters ahead for shipping, rail, chalking next year. i want to start with what is happening in shipping. here is what i don't get. the next which shows how much it costs to ship commodities around the world is down 60% since august, but the index that measures how much it costs to ship oil is up 45%. why? lee klaskow from bloomberg intelligence joins me from new jersey. they both speak to demand an art saying totally different things. what do you say? lee: fascinating to me as well. what it says about the tribal industry is that the demand is there for the demand is therefore crude oil. the reason it is not therefore dry bulk is it has to do with iron ore, oil, china. there was a lot coming online in the dry bulk sector. that is depressing prices in the
baltic dry index, hitting a new low recently. on the tanker side, you are seeing the opposite effect. you're seeing supply coming online in terms of supply of crude. people are not only stockpiling it but they are keeping it in storage hopefully when the prices go up and they can sell that at a higher price. alix: what is going to lower tanker rates for oil? in order for the u.s. to export we need to come down for it to be economical. expectations will be 16, 17% next year according to consensus estimates. that is driven by supply in terms of the tanker markets, some as to increase roughly five, 6% next year. as it relates to exporting out of the u.s. and i a slow positive for the industry. it is not going to be an immediate win as soon as the ban is lifted. alix: we have to leave it there
carol: you are listening to the bloomberg advantage on bloomberg radio. i am carol massar. my cohost, cory johnson come off on this tuesday. one of talk about telecom, media, and technology. let's get an idea of the look back at 2015, what it might mean for 2016. alex sherman is in the house, our technology, media, and telecom m&a reporter. it has been a fascinating year in 2015.
alex: definitely pick it has been a year of biggest ever. no difference in tech, media, telecom. we saw the largest technology deal of all-time, dell acquiring emc. we saw the largest cable the old of all-time, charter buying time warner cable, after comcast dropped out. and the question, i think, will be for 2016, will we build on this, will we see more technology deals? we didn't only see the biggest technology deals of all-time, we saw the second-biggest technology deal of all-time. technology where growth has stalled and the only way out is m&a. there will be a theme next year. you see these companies come together and they fine-tune the core business. you see that in the drug space with dupont and dow chemical link up, where they come together and break it down into
a purer place. do we see that in the tech, telecom, media space? alex: do we see m&a from the splits we have already seen in 2016? a large number of big-name companies -- hp, symantec, ebay -- have already split. on the one hand, you can ask yourself if we are going to see more of these splits or divestitures from other legacy tech companies that don't have as much growth as they used to. ibm comes to mind. that would be a big deal. the other question is, after a year goes by, some of those assets become targets. when we see google make -- will we see google make a run at paypal? , which malone's company loves e-commerce assets, making a run at ebay? split, which for tax
reasons you are not allowed to do anything until that one-year point goes by pick it would still be a tax-free spin. carol: what about the sales force? almost sold to microsoft. does that deal, to play potentially in 2016? alex: good question. that would be one of the biggest tech deals of all-time. broke anddeal we bloomberg and some people i've spoken to have actually said it is possible we have killed the deal when it became public. it will be a big question if microsoft returns to sales force. i don't think they are the most likely buyer. big, bad oracle, which is very acquisitive, could be another suitor, and oracle has not done a big deal for a wild. -- ia while. carol: what about ibm? going through a huge transition, trying to find tune that company
and move more aggressively into the cloud. could we see something? not: ibm, like apple, is known for big m&a and they made small acquisitions in 2015. everybody is waiting to see if 2016 is the year they do some thing big. ibm, if you talked to a lot of people, they say they need to do something big and it needs to get better and growth needs to come from somewhere. it could come from the split or maybe it could come from the first really large acquisition that ibm has made, at least certainly genes entire time as ceo. carol: comcast could not get the deal done with time warner cable of the former cfo is in charge of m&a. do they need to do something? should they do something? alex: comcast hired a guy who was the head of m&a at morgan stanley. he is very close to t-mobile, when he was at morgan stanley. a lot of people have speculated that maybe that means comcast
will get into the wireless space. i don't know. comcast is in interesting position. they did not let time warner cable. huge deal. a lot of assets at their disposal and they want to do something big. some people think it will be wireless and some people think it will be europe. it will be elsewhere globally because comcast is a u.s. company right now by and large. they own nbc. the question is, today's -- do they decide to go internationally or look domestically and stay close to home doing smaller deals while this administration is still in power? carol: corey and i spent so much time talking to you about content and how important it is for media companies. how is the drive for acquisition of content shaping the m&a landscape in 2016? alex: i mentioned malone in terms of ebay. this could be the year john
malone becomes the main consolidator of content. we will see if he brings gate.er starz and lions if that deal happens, sources have told me that malone's vision is to put together these smaller committees and make his own mini time warner. it is possible that that combined company would emerge and maybe that company would be acquired by discovery, another company that malone owns a stake in. he could possibly build together a big media company out of these so called free radicals come he has called them. carol: cbs and viacom, i'm just curious, summer redstone -- sumner redstone. staysthe sumner alive, i don't think anything happens. his healths away -- has been an issue -- i wish i could tell you more. i've no idea. everyone i speak to as no idea how that plays out. comeose two companies
together like they once were or if they remain separate or something else makes a play for one or the other. carol: kind of interesting. if the m&a environment mellows out, we have an unbelievable record year in 2015. i'm assuming it impacts the space you follow, the media, the telecom, the tech guys. alex: the big space we are not likely to see a lot of m&a is telecom. at&t, verizon, they may make content acquisitions. one of the interesting things in 2015 was verizon buying aol. that was not on anyone's radar screen. carol: the little head scratching over that. alex: that single set verizon may by yahoo! i don't think we will see consolidation with sprint and t-mobile. they basically already told sprint that we are not going to let you buy t-mobile and if that doesn't happen, verizon and aol -- excuse me, verizon and at&t are just too big at this point to make any acquisitions of size in that space. carol: this is a fast-moving space.
what can people -- working people find the podcast? alex: find it on itunes, called "deal of the week," orford bloomberg users, your bloomberg terminal. carol: good stuff to know from alex sherman. m&anology, media, and reporter bloomberg news. couldyear for m&a in 2015 getting the lowdown on the possible plays to come in 2016. you are listening to bloomberg on television, radio, and bloomberg.com.
alix: welcome back to "bloomberg markets." i am alix steel. time for the biggest business stories in the news right now. the faa says boeing will take $12 million for failing to meet a deadline for showing airlines a way of reducing the risk of fuel tank explosions. aeing will also have to take series of actions to improve the safety certification of its planes and the aircraft reduction quality control. the fuel tank instructions are part of an effort to address problems that caused the 7'7" fuel tank to explode over the atlantic ocean off of long island, new york, in 1996. the news is getting worse for beleaguered toshiba. moody's and s&p are cutting it to junk. shares fell until give today to the lowest in more than six years after the company forecasted a record $4.5 billion loss for the fiscal year. shares ended the session down a 12%, the lowest point since
march 2009. including moneys to kind of nearly 10%, the japanese, has lost about $2 billion in market value of the last two days. in los angeles, a judge has declined to order a mental evaluation of sumner redstone, citing the media moguls privacy rights. but attorneys can take sworn testimony from two doctors who are treated the 92-year-old redstone. is expo from contents he cannot make decisions for himself. from point you cannot make decisions for himself. and that is your bloomberg business flash. ramy has a check on some of the big movers in nasdaq. ramy: i am taking a look right now. whole foods hitting session highs. in fact, at its highest since early august. it is up by nearly 5.5%, this after cleveland research saying
that it is the better sales trends driven by more promotions. clinton says that longer-term estimates into next year are in line with consensus. you will remember that the stock price has been down year to date. marriott is also near session highs and it is at its highest since december 10. right here it is up by 5%. today the hotelier file that proxy statement we have been waiting for to acquire the starwood hotel chain. we reported that in mid-november when the news broke. it is restarting its share buyback immediately. netapp shares are at session highs. you see the trend here? session highs all of the place kick but they are still in the red. they hit the lowest level since 2009 after they announced in $870 million deal to buy the company solid fire, of flash storage company. rbc capital downgraded the stock
to sector perform from outperform. finally, yelp is having its best day in a month. it is not part of the nasdaq 100, but important to note that shares are at session highs by more than 7% because there is speculation happening out there that it could become a takeover target. yelp is finding some support from its outside short position. turns out 17% was sold short as of november 30. chipotle is dealing with another food scare. cdc says five people have gotten sick after eating at restaurants in kansas, north dakota, and oklahoma in november. it is down 7% since yesterday, overall a bear market since the reports of e. coli have broken out. let's bring in our restaurant reporter craig giammona. has all the downside been bacon yet-- baked in yet?
craig: doesn't seem like it. the shares took a little bit before the close and down again today. there was a sense that they were starting to move out of it, but you get another rash of negative headlines and it is down again. out: one analyst pointed that there are so many different geographic regions where we are seeing this hit that it is unlikely that it is one ingredient and one source. what does that do for chipotle to track this down and fix it? craig: it is not good, and the problem for chipotle is they have not found the cause could they need the cdc to come out and say it is cilantro or tomatoes, just to give them some closure so they can move on. peter makes the point that it is all over the country and maybe not just one ingredient, which maybe speaks to a wider problem. alix: will this affect new store openings? that is what makes it a growth stock, how many stores can actually open. craig: they say no, full steam ahead as far as openings in 2016.
the stock will be down for the quarter, they predicted 11%, some saying it could be worse. if the sales stay depressed will they back off those numbers? as of now, they say no. alix: thank you so much. craig giammona joining us on chipotle. we have some breaking news for you, getting the latest sign of numbers on obamacare. drew armstrong is joining us for the latest. it looks like more than 8.3 million people have signed up in the federal market so far this year. under 8.5 2 million people -- alix: i rounded up. drew: the obama administration has been lowballing estimates all year, saying 2016 coverage wasn't going to be a huge increase from 2015. as it turns out, they have substantially outpaced where they were at about the same time last year. last year they had about 6.5 million people sign up. this is nearly 2 million more than that. really good news for the lot because you get more people
covered and the law becomes more sustainable and it is good news for hospitals, which are counting on having these insured paying customers when they come to the door, and good news for insurers, who are waiting to see how many new customers are we going to get, how many are going to come into obamacare's marketplaces and buying coverage that the federal government is helping to pay for. alix: some the estimates would be 9.1 million at the end of next year and some are plenty to the fact that the growth rates are slowing does this debunk that at all? drew: there are still a few more weeks of enrollment left but this is just for the people who wanted to get coverage of starting january 1, the big deadline from and it got all the people who had coverage and you had it renewed -- and who had it renewed. more people might get coverage starting in february or march, but this is really good news for the administration, and they are touting it, unsurprisingly. also has big implications for
the presidential election. all the republican candidates are very opposed to obamacare, saying they are going to repeal it and replace it with something else. yet you are seeing americans coming into the law. this is something democrats and the obama administration will put out as a counter. alix: and what do you do with the a .3 million people who have signed up is a bigger question. drew, really appreciated on the breaking news. turning out to nike, the company's posting earnings after the bell today and the stock is pretty much soaring, shares up 35% this year. what could stop its momentum? bloomberg news reporter matt townsend joins us now. is it china, is it margins? well, it is china. over the past four quarters they've averaged 1% growth in china, which, while most of the companies operating in china have struggled, there is a lot of concerns about the chinese economy. nike hasn't shown weakness yet. there is a lot of concern that china slows down for nike, and
china has been a big growth engine for nike the past six-eight quarters or so, it could disappoint investors. nike has gotten to the point where they keep beating expectations and the stock is trading at a pretty high multiple right now. there is a lot of room for them to disappoint. if china comes in week. alix: what about the growth margin pressure? we jealous have to discount so much in north america to get inventory out the door -- retailers have to discount so much in north america to get inventory out the door. matt: they definitely faced some of that pressure. the warm weather that everybody is talking about. this time it has validity because we are looking at the warmest december in years, and a nike sells a lot of outerwear for running and you figure those things are not going to sell as well. alix: what will we hear from nike about the dollar impact? matt: again, they will probably say that it is a huge impact and they have all these hedging
programs in place and the impact of the starter dollars built into the results. a lot analysts have that baked in. so it is more than expected, that could be a problem and that could make sales miss estimates. at margins, looking looking at dollar, but most importantly, want to focus on china and demand there. matthew, thank you very much. a programming note for you -- gop presidential hopeful governor john kasich will be joining "with all due respect" 5:00 p.m. eastern today. you do not want to miss it. more "bloomberg markets" on the other side of this break. ♪
from bloomberg world headquarters in new york, i'm david gura. it's beginning to look a little bit like christmas. the economy grew in the third quarter. nike -- can continue to outperform? they report earnings after the bell. but first, let's head to the markets desk where ramy inocencio has the latest. ramy: we are near session highs, just about at session highs. it looks like markets are shrugging off a drop in existing u.s. home sales. they are at an annualized rate